Policy and Economy

A map of the free and non-free countries of the world

2012-05-31T07:38:00.001-04:00

Here is the 2012 world map from Freedom House showing the free, partly free, and non-free countries of the world. The first thing that strikes me is how freedom or lack thereof is largely contiguous. Europe and the Americas tend to be free; Asia and Africa tend not to be free. Also, in general, free countries tend to be wealthier than non-free countries. (India is a notable exception!)

The evidence suggests that these are not coincidences. First, as Fareed Zakaria points out in The Future of Freedom, when a country becomes a democracy its per-capita GDP largely determines whether it will remain a democracy or revert back to dictatorship.

Second, historically, ideas about both political freedom (John Locke) and free-market capitalism (Adam Smith) came from Great Britain. The map below is largely a map of the influence of Great Britain and later the United States. The ideas about freedom, democracy, and capitalism spread from Great Britain to Western Europe and British colonies around the world. You can see below that the former British colonies of the United States, Canada, Australia, New Zealand, India, Botswana, and South Africa are all green, indicating that they are free countries. The United States in turn has influenced the Americas (the Monroe Doctrine and the Cold War), Western Europe (the Cold War), Japan (we effectively wrote their constitution after World War II), South Korea (the Cold War), and Taiwan (the Cold War). At the southern tip of Africa, South Africa and Botswana were both British colonies, and Namibia was previously controlled by South Africa. All three are green, indicating freedom.

I also find it interesting to see how the number of free countries has changed during my lifetime.

1972: Free - 29%, Partly Free - 25%, Not Free - 46%
2012: Free - 45%, Partly Free - 31%, Not Free - 24%

S&P/Case-Shiller national home price index falls again

2012-05-29T09:59:00.000-04:00

In the first quarter of 2012, the S&P/Case-Shiller national home price index fell 1.9% year-over-year:

Data through March 2012, released today by S&P Indices for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, showed that all three headline composites ended the first quarter of 2012 at new post-crisis lows. The national composite fell by 2.0% in the first quarter of 2012 and was down 1.9% versus the first quarter of 2011. The 10- and 20-City Composites posted respective annual returns of -2.8% and -2.6% in March 2012. Month-over-month, their changes were minimal; average home prices in the 10-City Composite fell by 0.1% compared to February and the 20-City remained basically unchanged in March over February. However, with these latest data, all three composites still posted their lowest levels since the housing crisis began in mid-2006. ...

The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, posted a 1.9% decline in the first quarter of 2012 over the first quarter of 2011.

Unfortunately, crappy journalists at several different news organizations keep emphasizing the 20-city numbers instead of the national numbers. Why? Why would anyone think that an index that measures a random selection of 20 cities deserves more emphasis than an index that covers the overall country? (Note: The S&P/Case-Shiller national home price index really only measures 70% of the country, but that's still way more than just 20 cities.)

China criticizes U.S. human rights

2012-05-25T22:07:00.000-04:00

Personally, I think constructive criticism of America's human rights record should be welcomed. In the case of the Human Rights Record of the United States in 2011, China backs up their criticisms with plenty of references. Here's a sampling from Section 2, "On Civil and Political Rights":

The U.S. imposes fairly strict restriction on the Internet, and its approach "remains full of problems and contradictions." (The website of the Foreign Policy magazine, February 17, 2011) ...

The U.S. Patriot Act and Homeland Security Act both have clauses about monitoring the Internet, giving the government or law enforcement organizations power to monitor and block any Internet content "harmful to national security." Protecting Cyberspace as a National Asset Act of 2010 stipulates that the federal government has "absolute power" to shut down the Internet under a declared national emergency. According to a report by British newspaper the Guardian dated March 17, 2011, the U.S. military is developing software that will let it secretly manipulate social media sites by using fake online personas, and will allow the U.S. military to create a false consensus in online conversations, crowd out unwelcome opinions and smother commentaries or reports that do not correspond with its own objectives. The project aims to control and restrict free speech on the Internet (The Guardian, March 17, 2011). According to a commentary by the Voice of Russia on February 2, 2012, a subsidiary under the U.S. government' s security agency employed several hundred analysts, who were tasked with monitoring private archives of foreign Internet users in a secret way, and were able to censor as many as five million microblogging posts. The U.S. Department of Homeland Security routinely searched key words like "illegal immigrants," "virus," "death," and "burst out" on Twitter with fake accounts and then secretly traced the Internet users who forwarded related content. According to a report by the Globe and Mail on January 30, 2012, Leigh Van Bryan, a British, prior to his flight to the U.S., wrote in a Twitter post, "Free this week, for quick gossip/prep before I go and destroy America?" As a result, Bryan along with a friend were handcuffed and put in lockdown with suspected drug smugglers for 12 hours by armed guards after landing in Los Angeles International Airport, just like "terrorists" . Among many angered by the incident in Britain, an Internet user posted a comment, "What' s worse, being arrested for an innocent tweet, or the fact that the American Secret Service monitors every electronic message in the world?" (The Daily Mail, January 31, 2012) ...

Note that although the report misses this nuance, Leigh Van Bryan, a tourist, used the word "destroy" as British slang for "party", but U.S. officials interpreted the word literally. He was jailed and deported because of this literal interpretation. The creepy thing about this incident is that it suggests the N.S.A. is reading everyone's tweets.

The U.S. continued to violate the freedom of its citizens in the name of boosting security levels (The Washington Post, January 14, 2012). The Electronic Frontier Foundation in 2011 released a report, "Patterns of Misconduct: FBI intelligence violations from 2001-2008," which reveals that domestic political intelligence apparatus spearheaded by the Federal Bureau of Investigation, continues to systematically violate the rights of American citizens and legal residents. The report shows that the actual number of violations that may have occurred from 2001 to 2008 could approach 40,000 possible violations of law, Executive Order, or other regulations governing intelligence investigations. The FBI issued some 200,000 requests and that almost 60 percent were for investigations of U.S. citizens and legal residents (www.pacificfreepress.com). The New York Times reported on October 20, 2011, that the FBI has collected information about religious, ethnic and national-origin characteristics of American communities (The New York Times, October 20, 2011). According to a Washington Post commentary dated January 14, 2012, the U.S. government can use "national security letters" to demand, without probable cause, that organizations turn over information on citizens' finances, communications and associations, and order searches of everything from business documents to library records. The U.S. government can use GPS devices to monitor every move of targeted citizens without securing any court order or review (The Washington Post, January 14, 2012). ...

The U.S. lacks basic due lawsuit process protections, and its government continues to claim the right to strip citizens of legal protections based on its sole discretion (The Washington Post, January 14, 2012). The National Defense Authorization Act, signed December 31, 2011, allows for the indefinite detention of citizens (The Washington Post, January 14, 2012). The Act will place domestic terror investigations and interrogations into the hands of the military and which would open the door for trial-free, indefinite detention of anyone, including American citizens, so long as the government calls them terrorists (www.forbes.com, December 5, 2011).

Business lessons from Google

2012-05-24T06:26:00.000-04:00

Former Googler Julie Chow, author of a new book, lists five lessons on how to do business like Google:

1. Launch and iterate. Even the smartest of the hyper-educated Google leaders cannot predict which products and features will attract a sizable user base. Instead, they urge teams to launch quickly and iterate based on what they learn from their users. Rather than spending time perfecting a product that might not work, get it out there, and let the feedback guide future development. ...

2. Fail fast. If you try a lot of stuff by launching early and iterating, you'll fail at most attempts. This is the secret to innovation. Failure is not a bad thing, but slow failure in the market is. Launch, iterate, and declare the failures as quickly as you can. Most importantly, learn from those failures to help guide future efforts.

3. Focus on the user. Your customers or users should be your singular focus, always. A question I ask incessantly to maintain this focus is: "What problem are we trying to solve for our customers?" Every product or service must be linked to a problem or challenge that will make their lives easier.

4. Ask forgiveness, not permission. This mantra was important to mobilize every Google employee in the company to do the things they felt were right without worrying about what approvals they needed to do it. The idea is to remove barriers and to empower employees to act quickly. Reward employees for taking initiative, and treat their missteps as any other failure — something to learn from, but not to dwell on.

5. If you see a void, fill it. This is my favorite lesson from Google. It gives explicit permission to employees and the expectation that, if something is broken, everyone is empowered and responsible to fix it. If there is a spill in the kitchen, clean it up. If the copy machine is broken, file a ticket. And if you see a void in the market for an application you believe users will love, then build it.

I think the last sentence of number five is the most important for aspiring entrepreneurs trying to figure out what kind of opportunity to pursue. Figure out what is missing or needs improvement, then make that the market for your business.

Housing recovery a long way off

2012-05-23T05:43:00.002-04:00

In a CNBC editorial, Michael Yoshikami argues that a housing market recovery is still a long way away:

Housing starts were surprisingly strong this week, while there was improving sentiment from home builders. So should we start to breathe a sigh of relief that the housing market is returning to health? The short answer is no. The headlines say that housing is stabilizing and there are signs of life in the real estate sector. This is true but is only part of the story. Signs of life is far different than a return to healthier times.

While KB Homes and Toll Brothers are reporting sales increases, this does not erase the fundamental problem with the real estate market today; there are too many people wanting to sell and not enough buyers. In some neighborhoods in the United States, every other house is for sale and sitting stagnant with no takers. But this is the obvious sign that the real estate market is troubled; there are deeper problems below the surface.

What is more troubling is in every block in neighborhoods across the United States, there are huge numbers of potential sellers that would sell their house if they could get the price they believe their house is worth. This huge reserve of sellers creates a supply waiting to flood the market when any sign of recovery in real estate capital values returns.

Additionally, banks continue to hold huge inventories of foreclosed properties waiting for a rebound in the market before placing these properties into the real estate market. ...

In addition to supply issues, the U.S. economy is far from healthy. While we are in the midst of an uneven recovery, unemployment remains stubbornly high and the prospects of a more normalized employment rate are far off in the distance.

Why did America's housing bubble decline more than those elsewhere?

2012-04-28T00:55:00.001-04:00

Much of the developed world (especially America and Europe) had a housing bubble. The Economist asks why America's fell so much faster than the bubbles in Europe:

Perhaps the difference is institutional. American banks had poorer lending standards and have been quicker to foreclose on properties; borrowers have been readier to walk away from their homes. In European countries, owners have been able to sit tight in the hope that prices will recover. European markets are certainly a lot less liquid. Irish transaction volumes dropped by 83% from their peak and Spanish ones by 64%, but American deals fell by just 46%. Europe is going in the same direction as America. It is just getting there more slowly.

Updated housing graphs

2012-04-19T06:41:00.032-04:00

I have updated my national housing bubble graphs to reflect the latest data available. It covers home prices from 1970-2011. It looks like U.S. home prices are fairly valued, although it varies by metro area. As I said in the past, I don't expect any significant overshooting nationally. I stick by that prediction.

Here, the red line represents inflation-adjusted housing prices, and the blue line reflects nominal housing prices:

The graph below compares the change in home prices to the change in owner-equivalent rents over time. Without any bubbles, they should increase at roughly the same rate over time:

TurboTax Online is a ripoff!

2012-04-17T23:54:00.002-04:00

After years of buying the software version of TurboTax Deluxe—originally on CD but last year as an Amazon.com download—this year I made the mistake of using TurboTax Online. I'll never make that mistake again.

TurboTax Online sucks you in with the promise of a Free Edition. Of course, if you have any investments, you will eventually be told that you cannot complete your taxes using the Free Edition. You are then given the option of buying the Deluxe Edition or the Premier Edition, both for a much higher price than you can buy the same editions from Amazon.com.

It gets worse. After you have spent several hours doing your taxes, and are almost done, you are told that you must pay an extra $40 to complete your state tax forms. By contrast, if you buy from Amazon.com, state taxes are included with TurboTax.

Here's the cost comparison:

TurboTax Deluxe Online + State: $90
TurboTax Deluxe download from Amazon + State: $30

TurboTax Premier Online + State: $90
TurboTax Premier download from Amazon + State: $40

TurboTax Premier Online is more than DOUBLE the cost of the same software from Amazon.com. TurboTax Deluxe Online is TRIPLE the cost of the same software from Amazon!

The lesson: Never, ever use TurboTax Online!

SOPA is back!

2012-04-06T14:49:00.001-04:00

Apparently, the Obama administration still advocates censorship of the internet:

After the largest online protest in history, the Obama administration is still voicing support for SOPA. ...

Just the other day, the administration sent a letter to Congress to demonstrate their support for new internet censorship legislation. Victoria Espinel, Obama's so-called "copyright czar" just said: "We still need legislation for blocking foreign websites." You can read the full statement here.

Peter Beinart argues for a two state solution for Israel

2012-03-30T16:51:00.000-04:00

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I largely agree with him. My only disagreement is that I don't believe countries should be based on religion. I dislike the idea of a Jewish state as much as I dislike the idea of an Islamic state or a Christian state.

The world's poor are becoming richer

2012-03-06T06:44:00.001-05:00

In the past few years, global poverty has been declining throughout the world—especially China:

The best estimates for global poverty come from the World Bank’s Development Research Group, which has just updated from 2005 its figures for those living in absolute poverty (not be confused with the relative measure commonly used in rich countries). The new estimates show that in 2008, the first year of the finance-and-food crisis, both the number and share of the population living on less than $1.25 a day (at 2005 prices, the most commonly accepted poverty line) was falling in every part of the world. This was the first instance of declines across the board since the bank started collecting the figures in 1981.

The estimates for 2010 are partial but, says the bank, they show global poverty that year was half its 1990 level. The world reached the UN’s “millennium development goal” of halving world poverty between 1990 and 2015 five years early. This implies that the long-term rate of poverty reduction—slightly over one percentage point a year—continued unabated in 2008-10...

Virginia residents: Vote against Mitt Romney tomorrow!

2012-03-05T00:14:00.000-05:00

Residents of Virginia, please go out and vote for Ron Paul (and against Mitt Romney) tomorrow!

It's a two man race in this state (Santorum and Gingrich aren't on the ballot) and Virginia has open primaries. That means even if you're a loyal Democrat or independent, you can cast a ballot against Mitt Romney in the Republican primary tomorrow.

S&P/Case-Shiller national HPI shows 4% fall in home prices

2012-02-28T13:23:00.002-05:00

U.S. home prices fell 4.0% during 2011:

Data through December 2011, released today by S&P Indices for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, showed that all three headline composites ended 2011 at new index lows. The national composite fell by 3.8% during the fourth quarter of 2011 and was down 4.0% versus the fourth quarter of 2010. Both the 10- and 20-City Composites fell by 1.1% in December over November, and posted annual returns of -3.9% and -4.0% versus December 2010, respectively. These are worse than the -3.8% respective annual rates both reported for November. With these latest data, all three composites are at their lowest levels since the housing crisis began in mid-2006.

Note: Only the national composite index really matters when measuring the national housing market. Ignore the 10- and 20-city indexes.

In addition to both Composites, 18 of the 20 MSAs saw monthly declines in December over November. Miami and Phoenix were up 0.2% and 0.8%, respectively. At -12.8% Atlanta continued to post the lowest annual return. Detroit was the only city to post a positive annual return, +0.5% in December versus the same month in 2010. In addition to the three composites, Atlanta, Las Vegas, Seattle and Tampa each saw average home prices hit new lows. ...

Translation: Washington, DC metro area home prices fell, too.

As I pointed out yesterday, Phoenix, Detroit, and Miami are dirt cheap, so the prices should rise. Las Vegas and Tampa are also dirt cheap, but apparently prices are still falling there.

“In terms of prices, the housing market ended 2011 on a very disappointing note,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “With this month’s report we saw all three composite hit new record lows. While we thought we saw some signs of stabilization in the middle of 2011, it appears that neither the economy nor consumer confidence was strong enough to move the market in a positive direction as the year ended.

“After a prior three years of accelerated decline, the past two years has been a story of a housing market that is bottoming out but has not yet stabilized. Up until today’s report we had believed the crisis lows for the composites were behind us, with the 10-City Composite originally hitting a low in April 2009 and the 20-City Composite in March 2011. Now it looks like neither was the case, as both hit new record lows in December 2011. The National Composite fell by 3.8% in the fourth quarter alone, and is down 33.8% from its 2nd quarter 2006 peak. It also recorded a new record low.

“In general, most of the regions also posted weak data in December. Eighteen of the cities saw average home prices fall in December over November. Seventeen of the cities have seen monthly declines for at least three consecutive months. In addition to both monthly composites, 10 of the cities saw home prices fall by more than 1.0% during the month of December. The pick-up in the economy has simply not been strong enough to keep home prices stabilized. If anything it looks like we might have reentered a period of decline as we begin 2012.”

To paraphrase Annie: The bottom, the bottom, I love you, the bottom. You're always a year away.

Warren Buffett is a housing bull

2012-02-27T11:53:00.000-05:00

Billionaire investor Warren Buffett believes housing is a better investment than stocks right now:

Warren Buffett says along with equities, single-family homes are a very attractive investment right now.

Appearing live on CNBC's Squawk Box, Buffett tells Becky Quick he'd buy up "millions" of single family homes if it were practical to do so.

If held for a long period of time and purchased at low rates, Buffett says houses are even better than stocks. He advises buyers to take out a 30-year mortgage and refinance if rates go down.

His housing recommendation is likely based on the fact that mortgage rates are incredibly low right now. Nationally, home prices are no cheaper than their pre-bubble norm, although it varies depending on where you live.

I believe that some housing markets are far better buys than others. Cities with very high unemployment rates have dirt-cheap home prices right now. Places like Las Vegas, Phoenix, Detroit, and most of Florida have prices below their historical norms.

Government spending in context

2012-02-17T17:45:00.004-05:00

Happy Valentine's Day, renters!

2012-02-14T13:25:00.002-05:00

We get no respect, no respect at all:

In a survey of 1,000 single people, more than a third of women and 18% of men said they would much rather date a homeowner than a renter.

Ouch!

Only 2% of women said they preferred to date a man who rents, while only 3% of men said they would choose a woman who rents over one that owns her home, according to the survey, which was conducted by Harris Interactive for real estate site Trulia.

Both sexes also clearly prefer it when there's no roommate in the picture; 62% of survey respondents, men and women, prefer to date singles who live alone. ...

Trulia also asked which home features are the biggest turn-ons. Number one turned out to be a master bath. Men (64%) love that private sanctum almost as much as women (75%) do.

Walk-in closets were cited by 55% of men and 72% of women and gourmet kitchens got 51% of the male vote and 62% of the female. Hardwood floors, outdoor decks and home theaters also came in high on the list.

S&P/Case-Shiller HPI down in November

2012-01-31T09:34:00.003-05:00

The November numbers for the S&P/Case-Shiller Home Price Index are out. The 20-city index is down 3.7% year-over-year and down 1.3% month-over-month:

Home prices posted a steep, month-over-month drop in November, falling 1.3%, according to the latest S&P/Case-Shiller 20-city report. Prices fell in 19 of the 20 cities the index covers.

Prices are down 3.7% from a year ago, and off 32.8% since they peaked in the summer of 2006. The index is currently only 0.6% above its March, 2011 low.

"Despite continued low interest rates and better real GDP growth in the fourth quarter, home prices continue to fall," said David Blitzer, spokesman for S&P.

December housing starts down 4.1% month-over-month; up 8% year-over-year

2012-01-19T12:19:00.001-05:00

Housing starts fell in December compared with November. (FYI, housing starts numbers are usually seasonally adjusted.) However, they are up about 8% year-over-year. Keep in mind that we've had abnormally good weather this winter, which is great for home building.

It wasn’t exactly a banner December for the home-building industry.

The nation’s builders started construction on 4.1% fewer homes compared with a month earlier. Construction decreased to a seasonally adjusted annual rate of 657,000 in December, the Commerce Department said Thursday.

But the news wasn’t all gloomy. The main reason for the monthly decline was a more than 20% drop in construction of multifamily homes with at least two units, a part of the market that tends to swing around a lot.

Other data were more positive. Analysts often pay more attention to the single-family sector, which made up more than 70% of housing starts in December. Single-family construction was actually up 4.4% from a month earlier and reached the highest level since April 2010 – a time when builders were ramping up construction in response to a government tax credit for first-time home buyers.

The housing sector is gradually, tentatively, slowly healing after a collapse in prices that started 5 1/2 years ago. There have been some encouraging signs of late, and builders have been growing more optimistic.

But it’s clear that there’s a long way to go. Since 1959, there have been about 1.5 million new homes started per year, on average. Last year, construction was started on only 607,000 homes – the best year since 2008, but still the third-worst year since the government began keeping records.

The clueless Fed

2012-01-16T07:28:00.002-05:00

The release of Federal Open Market Committee (FOMC) meeting transcripts from 2006 show how little America's top economic minds understand how leveraged asset bubbles harm the economy:

As the housing bubble entered its waning hours in 2006, top Federal Reserve officials marveled at the desperate antics of home builders seeking to lure buyers.

The officials laughed about the cars that builders were offering as signing bonuses, and about efforts to make empty homes look occupied. They joked about one builder who said that inventory was “rising through the roof.”

But the officials, meeting every six weeks to discuss the health of the nation’s economy, gave little credence to the possibility that the faltering housing market would weigh on the broader economy, according to transcripts that the Fed released Thursday. Instead they continued to tell one another throughout 2006 that the greatest danger was inflation — the possibility that the economy would grow too fast.

“We think the fundamentals of the expansion going forward still look good,” Timothy F. Geithner, then president of the Federal Reserve Bank of New York, told his colleagues when they gathered in Washington in December 2006. ...

The transcripts of the 2006 meetings, released after a standard five-year delay, clearly show some of the nation’s pre-eminent economic minds did not fully understand the basic mechanics of the economy that they were charged with shepherding. The problem was not a lack of information; it was a lack of comprehension, born in part of their deep confidence in economic forecasting models that turned out to be broken.

“It’s embarrassing for the Fed,” said Justin Wolfers, an economics professor at the University of Pennsylvania. “You see an awareness that the housing market is starting to crumble, and you see a lack of awareness of the connection between the housing market and financial markets.”

“It’s also embarrassing for economics,” he continued. “My strong guess is that if we had a transcript of any other economist, there would be at least as much fodder.” ...

The committee consists of the governors of the Federal Reserve and the presidents of the 12 regional banks.

“The speed of the falloff in housing activity and the deceleration in house prices continue to surprise us,” Janet Yellen, then president of the Federal Reserve Bank of San Francisco, said in September.

One builder she spoke with, she said, “toured some new subdivisions on the outskirts of Boise and discovered that the houses, most of which are unoccupied, are now being dressed up to look occupied — with curtains, things in the driveway, and so forth — so as not to discourage potential buyers.” ...

But the Fed’s chairman, Ben S. Bernanke, appears as the most consistent voice of warning that problems in the housing market could have broader consequences.

The general consensus on the board, summarized by Mr. Geithner, was that problems in the housing market had few broader ramifications. “We just don’t see troubling signs yet of collateral damage, and we are not expecting much,” he said at the September meeting.

Mr. Bernanke initially agreed, telling colleagues at his first meeting as chairman, in March, “I think we are unlikely to see growth being derailed by the housing market.”

As the year rolled along, however, Mr. Bernanke increasingly took the view that his colleagues were too sanguine.

”I don’t have quite as much confidence as some people around the table that there will be no spillover effect,” he said. ...

One fundamental reason for this blindness was that Fed officials did not understand how deeply intertwined the housing sector and financial markets had become. They also were convinced that financial innovations, by distributing the risk of losses more broadly, had increased the strength and resilience of the system as a whole.

So, for all the criticism you might give Ben Bernanke, apparently he's the least incompetent of the bunch.

I'll admit I didn't know that the housing bubble would cause a financial crisis. The best I can say for myself is that I expected a failure of Fannie Mae and Freddie Mac, but also expected more diversified financial institutions to be OK.

However, I expect people with Ph.D.s in economics to know a lot more about this stuff than I do. (After all, I'm a software developer, not an economist.) I especially expect it of economists who are supposedly so good at what they do that they get appointed to a post at the U.S. Federal Reserve.

DC-area homes of the 2012 presidential candidates

2012-01-13T08:28:00.003-05:00

A bunch of websites are posting photos of the 2012 presidential candidates' homes, probably sparked by this Zillow Blog post. Here are the homes the candidates have in the DC area:

Newt Gingrich
7410 Windy Hill Ct, McLean, VA 22102
Value: $1,284,400

Rick Santorum
10607 Creamcup Ln, Great Falls, VA 22066
Value: $1,305,100

Jon Huntsman
2121 Leroy Pl NW, Washington, DC 20008
Value: $3,303,100

Immediately prior to his purchase of the home, it was used as the residence for contenders on the Bravo reality TV show "Top Chef: Season 7".

Barack Obama
1600 Pennsylvania Ave. NW, Washington, DC 20500
Value: $261,632,300

The deadbeat hasn't paid rent in three years! Zillow.com gets the zip code wrong. It's 20500, not 20006.

Ron Paul
I don't know were Ron Paul lives in the DC area, but he's trying to sell his Texas home over the internet for $63,500 more than Zillow thinks it's worth.

Why you should oppose SOPA and PROTECT IP

2012-01-06T06:10:00.002-05:00

PROTECT IP and SOPA are two very similar bills making their way through the U.S. Congress. PROTECT IP is the name of the bill in the Senate and SOPA is the name of the bill in the House of Representatives. This video explains the dangers of these bills:

To help fight SOPA and PROTECT IP, visit americancensorship.org to contact your congressman and senators.

Zillow CEO on housing market

2012-01-05T04:07:00.004-05:00

S&P/Case-Shiller Index falls yet again

2012-01-02T04:06:00.000-05:00

I was on Christmas vacation last week. Here's some housing news that was released while I was gone:

Home prices fell for the sixth straight month in October, down 1.2% compared with September and 3.4% a year ago, according to the latest S&P/Case-Shiller 20-city index.

The decline was disappointing in light of several other recent reports, which painted a more positive picture of the housing market. ...

tight lending standards and a glut of foreclosures continue to weigh on the housing market, said Pat Newport, a housing market analyst for IHS Global Insight.

With so many homes for sale at distressed prices, the home price numbers come as no surprise, he said.

"The numbers are pretty bad and will get even worse over the next two years," he said.

The 20-city index has dropped every month since April. Since the housing bust began in mid-2006, homes have lost nearly 33% of their value.

CNN Money isn't clear about this, but they are referring specifically to the S&P/Case-Shiller 20-city seasonally-adjusted index.

The Wall Street Journal has a nice little graphic showing the year-over-year home price change measured by different sources:

How to become rich: Choose the right occupation

2011-12-29T06:32:00.060-05:00

According to this research paper, these are the career fields of Americans in the top 1% of the income distribution (as of 2005):

31% are non-financial executives, managers, or supervisors
16% are medical professionals
14% are financial professionals, including management
8.4% are lawyers
4.6% are in technical fields (computers, math, engineering, etc.)
4.2% are in skilled sales, excluding real estate and finance
3.8% are in blue collar or miscellaneous services
3.2% are in real estate
3.0% are in non-finance business operations
1.8% are professors or scientists
1.6% are in arts, media, or sports

So much for the myth from late night infomercial pitchmen that real estate is the path to wealth! The top 1% are ten times more likely to be managers.

The career fields of the super wealthy—the top 0.1%—are similar, but slightly different:

43% are non-financial executives, managers, or supervisors
18% are financial professionals, including management
7.3% are lawyers
5.9% are medical professionals
3.7% are in real estate
3.0% are in arts, media, or sports
2.9% are in non-finance business operations
2.9% are in technical fields (computers, math, or engineering)
2.3% are in skilled sales, excluding real estate and finance

Judging by this list, and what I've posted previously, for enterprising high school or college students who would like a successful career but don't know what they want to study, a finance, accounting, economics, engineering, math, or computer science bachelor's degree followed by a dual MBA/JD would give you a fantastic head start in life. ...But above all else, get that MBA!

How to become rich: Education and marriage

2011-12-26T06:10:00.001-05:00

Gallup has researched the difference between the top 1% of Americans and the rest. Not surprisingly, the wealthy are better educated and married:

To better understand who makes up the top 1%, Gallup combined 61 of its nationwide surveys conducted between January 2009 and November 2011. The resulting sample includes nearly 400 adults in households earning $500,000 or more annually, and more than 65,000 in households earning less than that. The official top 1% of American households in 2010 includes those with incomes of at least $516,633, according to data from the Tax Policy Center as reported in The Washington Post.

Advanced Education Separates the 1% From the 99%

Apart from their bank accounts, Gallup finds education to be the greatest difference between the wealthiest 1% of Americans and everyone else. The Gallup analysis reveals that 72% of the wealthiest Americans have a college degree, compared with 31% of those in the lower 99 percentiles. Furthermore, nearly half of those in the wealthiest group have postgraduate education, versus 16% of all others.

More generally, college education is strongly correlated with household income. Nine percent of Americans earning less than $20,000 per year are college graduates; this rises to majorities of adults in all income groups above $100,000. Similarly, few adults in low-income households have postgraduate education, and this rises only into the teens among middle-income adults. But it sharply increases among those earning $100,000 or more, peaking at 49% among those earning between $250,000 and $499,000, and those earning at least half a million.

The educational differences between the nation's "1%" and "99%" exceed all other demographic as well as political differences seen between these groups in the Gallup data. The next-most-significant distinction is marital status, with nearly three-quarters of the very wealthy (73%) being currently married, compared with half of all others (51%). Accordingly, by 49% to 31%, the very wealthy are more likely to have minor children in the household.

The impact of marriage is pretty simple to explain: Two salaries pay more than one. Regarding education, as I've said in the past level of education matters a lot, but what you study is every bit as important. Despite the fact that society indoctrinates high school students to try to attend high-ranking universities, choosing the right college major matters far more than going to the right school.